Daily Chart Art – May 24, 2010

EURUSD: 4-hour

PoD Chart

As expected, the EURUSD found some resistance right on the falling trend line and 50% Fibonacci retracement level I pointed out last Friday. With stochastics indicating overbought conditions, we could see price swing lower soon. If this happens, the EURUSD’s would probably fall back down to the previous week’s low at 1.2200 before encountering strong buying support. On the other hand, if buyers continue to push price higher and cause a candle to convincingly close above 1.2600, the next major resistance level to watch is the 61.8% Fib.

USDCHF: 4-hour

PoD Chart

It looks like a bullish flag chart pattern has formed on the USDCHF! A bullish flag is considered as a strong bullish signal, indicating that the current uptrend may continue once consolidation ends. In this case, we’re hoping to ride whichever way the flag breaks. If you’re part of the bull camp, look for a close above 1.1600, as it would mean a move towards 1.1700. Conversely, if you’re bearish on the pair, keep an eye open for a candle close below 1.1450 for a possible drop to 1.1300.

GBPUSD: 4-hour

PoD Chart

Lastly, let’s hop across the English Channel and take a look at the GBPUSD. Over the past week or so, the pair has been trading within a tight range of 250 pips. Price action is finding resistance at 1.4500, while finding support at 1.4250 every time it falls. Will the range continue to hold? Or will we see a breakout soon? If resistance fails to hold, we could see price rise back up to the 1.4700 handle. On the other hand, stochastics are showing overbought conditions, so we could see sellers jump back in to bring price back down to the support level at 1.4250.